Tesla Power? Why Tesla may want to sell you more than an electric car

By Claudia Assis

Bloomberg

Another day, another record for Tesla shares, with Wall Street increasingly aware that this is more than an investment in electric cars. It’s also about batteries.

“If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again,” Morgan Stanley analysts said in a note Tuesday. “Tesla is an extremely ambitious company for whom flooding the market with fun-to-drive EVs and giving competitors a headache might not be the endgame.”

Tesla
/quotes/zigman/118681/delayed/quotes/nls/tslaTSLA shares soared more than 16% to $254.14 on Tuesday, all but certain to close at a record. The stock has been on a tear since Feb. 10, setting record closes in seven of the past 11 trading days.

The Morgan Stanley analysts, led by Adam Jonas, argued Tesla could become the world’s low-cost producer in energy storage, opening the door for Tesla to disrupt “adjacent industries.” They upped their price target on the stock to $320 from $153.

Power storage is in something of a “space race” moment, with several companies dedicated to making it possible to turn on your coffee machine in the morning using electricity generated by yesterday’s sunshine or wind.

Storage is the “missing piece in the renewable energy puzzle,” Morgan Stanley said. Include Tesla in that hunt, it added.

Tesla is expected to announce its plan for a battery ‘gigafactory’ this week, possibly offering details around a partnership and the location of the plant.

Battery storage is $400 billion business in the U.S. and $2 trillion business globally, according to Morgan Stanley. One can start to understand the market’s enthusiasm for Tesla if it’s able to capture just a fraction of that.

Morgan Stanley estimated that by 2028 there will be 7.2 million Teslas out there, a global fleet of cars that could store up to 443 gigawatts of electricity– more than the entire daily electricity consumption of Mexico, the investment bank said.

Currently, the roughly 40,000 Teslas on the U.S. roads contain 3.3 gigawatts of storage, equal to 0.3% of U.S. electrical production capacity and 14% of total U.S. grid storage, Morgan Stanley said.

One Tesla Model S can store enough energy to power the average U.S. household for three and a half days. By 2020, Tesla’s estimated U.S. fleet of 690,000 cars will carry enough stored energy capacity to provide one full hour of electricity to 1.6% of U.S. customers.

Solar installer SolarCity Corp., which is backed by Tesla’s CEO Elon Musk, announced in December a partnership with Tesla for a residential solar backup power system using Tesla’s battery technology.

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